Fu Shou Yuan International : 2022可持续发展报告

(Fu Shou Yuan) 19427_ESG (Eng) Fu Shou Yuan 1st Proof Time: 21-04-2023_20:31:25 P.1 (P1) (C>E) 897

CONTENTS

Contents				1
Preface				2
Message from the Management	3
Sustainability Highlights	4
1.	Corporate Governance	5
	1.1	About Us		5
	1.2	Operating Performance	5
	1.3	Corporate Governance	6
	1.4	Diversity of the Board	8
2.	Governance of Sustainable Development	9
	2.1	Strategy of Sustainable Development		9
	2.2	Governance of Sustainable Development	10
	2.3	Stakeholder Communication	11
	2.4	Materiality Analysis	13
3.	Fu Shou Yuan: Bring About Quality Services	15
	3.1	Perfecting Services with Quality	15
	3.2	Reinforcing Quality Assurance	18
	3.3	Leading Innovative Services	21
4.	Fu Shou Yuan: Bring About Harmony in Society	25
	4.1	Expanding Public Services	25
	4.2	Spreading the Culture of Life	27
	4.3	Delivering Love and Care through Charity	29
5.	Fu Shou Yuan: Bring Together Competent and	31
	Versatile Employees
	5.1	Diversified Employment System	31
	5.2	Empowering Employee Development	34
	5.3	Protecting Health and Safety	36
	5.4	Building a Happy Life	37
6.	Fu Shou Yuan: Bring About Environmental Protection	39
	6.1	Creating Ecological Funerals	39
	6.2	Practicing Green Operation	40
	6.3	Addressing Climate Change	43
Appendix I - List of ESG Honors Received by Fu Shou Yuan in 2022	44
Appendix II -
List of Laws and Regulations	45
Appendix III - Guide of the Stock Exchange
46

(Fu Shou Yuan) 19427_ESG (Eng) Fu Shou Yuan 1st Proof Time: 21-04-2023_20:31:25 P.2 (P1) (C>E) 897

2 Preface

Summary of the Report

The Report is the seventh annual sustainability report of Fu Shou Yuan International Group Limited and its subsidiaries (hereinafter referred to as "we", the "Group" or "Fu Shou Yuan"). It covers our work during the period from January 1 to December 31, 2022 (the "Reporting Period"). The Report provides a focused discussion of stakeholders' concerns, and a comprehensive description and explanation of Fu Shou Yuan's performance and management policy in environmental, social and governance areas in 2022, illustrating how Fu Shou Yuan lives up to its commitments to sustainable development.

During the preparation of the Report, the information covered in the Report meets the four reporting principles as required by the Stock Exchange of Hong Kong Limited (the "Stock Exchange"), namely, materiality, quantitative data, balance, and consistency.

Scope of the Report

The scope of the Report is substantially the same as that of the 2022 annual report published by Fu Shou Yuanon April 25, 2023 ("2022 Annual Report") and covers Fu Shou Yuan International Group Limited and its subsidiaries.

Reporting Guidelines

The Report was prepared in accordance with the Environmental, Social and Governance Reporting Guide issued by the Stock Exchange (hereinafter referred to as "ESG Reporting Guide") and with reference to the concerns of Fu Shou Yuan's stakeholders.

Information Sources and Reliability

The information and examples used in the Report are mainly extracted from the Group's statistical report and related documents. The Group has pledged that the Report does not contain any false information or misleading statements, and we are responsible for the authenticity, accuracy and completeness of the Report.

Confirmation and Approval

Confirmed by the management of the Group, the Report was approved by the board of Directors of the Group on March 17, 2023.

Report Access and Feedback

The Report is available in Traditional Chinese and English for reference. The electronic version of the Report can be found in the "Financial Statements/ESG Information" section of the announcement on the website of the Stock Exchangeor on the official website of Fu Shou Yuan.

We value the suggestions of stakeholders and encourage readers to contact us through the following contact information. Your suggestions will help us further improve our reporting and enhance the overall sustainability performance of the Group.

Email: [e-mail]

Address:

Unit 709, K. Wah Centre, 191 Java Road, North Point, Hong Kong

or: Room 1306, Charity Plaza, No. 88 Cao Xi Road North, Xuhui District, Shanghai

(Fu Shou Yuan) 19427_ESG (Eng) Fu Shou Yuan 1st Proof Time: 21-04-2023_20:31:25 P.3 (P1) (C>E) 897

Message from the Management

3

The funeral service industry carries the most beautiful responsibility for society to take care people's journey of life, spread genuine kindness and attend to people's well-being, gathering up every speck of light in life. As a standard setter and integrator of China's funeral service industry, Fu Shou Yuan is always committed to "taking care life with life" in our warmest essence, creating the perfect grand finale for life with heartfelt services.

2022 was a year of both opportunities and challenges. In the face of China's rapid and intensive aging issue, Fu Shou Yuan shouldered an unshrinkable responsibility as a leading enterprise in the funeral service industry. For more than 20 years, we have been staying true to our corporate spirit of "Innovative, Genuine;Mindful and Sincere", practicing environmental, social and corporate governance responsibilities to proactively carry forward the zeitgeist of sustainable development, with ESG (Environment, Social and Governance) concepts deeply integrated intothe Group's development strategy, production and operations, in a bid to promote the healthy development of the funeral service industry.

Every journey ends at some point, and so as life. We believe that "farewell to the physical life, and continuation of the spiritual life", so the Group continues to innovate and expand its cloud series platform to provide comprehensive and heart-warming "farewell" services, applying new technology, new products and new models to pay reverence to every valuable life, so that the deceased can rest in peace and the living will be comforted.

As a "people-oriented and culture-rooted" enterprise, Fu Shou Yuan voluntarily assumes corporate, industry,social and history responsibility. In 2022, we continued to expand the scope of our public welfare services by engaging in assistance and poverty alleviation in many regions through Fu Shou Yuan Public Welfare Development Foundation. It is our aspiration to ride on the strength of public welfare undertakings to promote life education, so that more people can find warmth and strength even having to facelives, thus creating a better perception of life with Fu Shou Yuan's services.

We are well aware of the meaning of guarding life, and therefore have made endless effortsto nurture "life guardians", It is our commitment to ensure that people in Fu Shou Yuan remain true to their original aspirations through diversified training andsound career development system, with a view to empowering life with the strength of people in Fu Shou Yuan.

Under the backdrop of increasing public awareness of environmental protection and the dual carbon national goal (reaching carbon peakingand achieving carbon neutrality) that has been continuously promoted, Fu Shou Yuan keeps tapping the brand value in response to the national strategy of developing a "digital-based economy" and also in continuous pursuit of "Internet Thinking", integrating green technology in conventional businesses and promoting green funeral as a trendsetter for civilized sacrifices.

As an undertaker who deals with the departure of lives, we hope that all the work we go about will give more color, warmth and strength to life. In meeting the expectations of people for human rights, we have learnt to expect newborns with joy and send off the deceased with grace. In the future, as always, Fu Shou Yuan would bear the responsibilityof life which is something redeeming for all the divides between the living people and the deceased, so as to build a world that enjoys shared happiness.

Bai Xiaojiang

Fu Shou Yuan International Group Limited

Chairman of the Board of Directors and Executive Director

Wang Jisheng

Fu Shou Yuan International Group Limited

Executive Director and President

	(Fu Shou Yuan) 19427_ESG (Eng) Fu Shou Yuan 1st Proof Time: 21-04-2023_20:31:25 P.4 (P1) (C>E) 897
4	Sustainability Highlights

ECONOMIC ISSUES

ENVIRONMENTAL ISSUES

LABOUR ISSUES

SOCIAL ISSUES

Revenue:		Water Consumption:
RMB 2,171.6 million		4.21 tons/ten-thousand
		RMB
		almost unchanged compared
		with the previous year
Total Number of Services:		Power Consumption:
86,428		5.82 MWh/million
		RMB revenue
Regional Coverage:		Energy Consumption:
More than 46 cities in		11.68 MWh/million
19 provinces, autonomous		RMB revenue
regions and municipalities		Decrease by 22%
		compared with the previous
		year
		Non-hazardous Waste:
		1.97 tons/million
		RMB revenue
		Decrease by 1% compared
		with the previous year
		Greenhouse Gas
		Emissions:
		4.77 tCO2e/million
		RMB revenue
		Decrease by 1% compared
		with the previous year

Gender distribution:

Female employees accounting for 41.28%

Training Hours per

Employee:

98.42 hours/employee

Customer Satisfaction Rate:

97%

Total Public Welfare Expenditure:

RMB3.406 million

Number of Suppliers:

662 suppliers, from

6 regions of the country

(Fu Shou Yuan) 19427_ESG (Eng) Fu Shou Yuan 1st Proof Time: 21-04-2023_20:31:25 P.5 (P1) (C>E) 897

Corporate Governance

5

Building on an integrity-based sound corporate governance, Fu Shou Yuan continues to improve its board structure and responsibilities, strengthen internal controls and risk management, and maintain the highest ethical standards by relentlessly reinforcing corporate governance to enhance competitiveness and lead the industry.

1. About Us
   Founded in 1994, Fu Shou Yuan is not only a leading funeral and life technology service providerin China, but also a promoter and a participant in the development and reform of China's death care service industry. Fu Shou Yuan is also a place where memories and emotions are preserved and enshrined, a culture-oriented company that is dedicated to the preservation and promotion of the quintessence of traditional value, and a social citizen with a deep sense of corporate responsibilities. Over the past two decades, we have been atthe forefront of innovations in the industry and committed to leading the industry by achieving breakthroughs in concept, product, service, culture, art and technology.
   At present, Fu Shou Yuan's businesses cover various fields, such as cemetery operation, funeral service, equipment and supplies, planning and design, pre- need funeral contracts, funeral Internet +, and life education. Our presence has been expanded to 46 cities in 19 provinces, autonomous regions and municipalities including Shanghai, Henan, Chongqing, Anhui, Shandong, Liaoning, Jilin, Heilongjiang, Fujian,Zhejiang, Jiangxi, Jiangsu, Guangxi, Beijing, Guizhou, Inner Mongolia, Gansu, Hubei and Hebei.
   Listed on theStock Exchangeon December 19, 2013, Fu Shou Yuan became a model of compliance management and innovative development of death care service providers in China and was formally included in the Shenzhen-Hong Kong Stock Connect Program in December 2016. During the Reporting Period, Fu Shou Yuan received wide recognition in terms of ESG, and has been consistently awarded AA rating in MSCI ESG rating, taking a leading position among its peers. In addition, the Group has been selected as a constituent of the Hang Seng Corporate Sustainability Benchmark Index for two consecutive years.
2. Operating Performance
   Facing various kinds of uncertainties, Fu Shou Yuan has always adhered to the mission with faith and enthusiasm, providing customers with the best quality and warmest life services. On the one hand, in order to help customers who are unable to visit the cemetery in

person due to various reasons, we further deepen the modern service capabilities of online digital memorial service. On the other hand, in order to create a sustainable century old cemetery, we have continued to improve the new paradigm for ecological governance green cemetery, and walked in the forefront of the times.

In 2022, Fu Shou Yuan have completed two equity interest acquisitions and continued to expand cooperation and project construction in different important provinces and cities, and two projects under progress and preparation. In product, we empower cemetery and funeral home services through technologies such as intelligent interactive screens, digital rites, and digital twins, with a focus on body related and innovative services, achieving the coexistence of virtual and real, caring, and diverse cemetery and funeral home services. At the same time, we continue to upgrade the industrial chain, expand service boundaries, and involve multiple fields such as environmental-friendly cremation, pre-need services, and landscape design, forming synergies and multiple risk resistance capabilities. Since its listing, Fu Shou Yuan has steadily increased its revenue and profitability, with a CAGR of 15.1% since 2013. The number of services has been increasing year by year, reaching 86,428 in 2022, a year-on-year increase of 12.6%.

2013-2022 Total revenue

								2,325.8 2,171.6
						1,850.6 1,892.5
				1,477.2	1,651.3
		1,108.0	1,267.7
611.8	795.1
2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

Total revenue (RMB Million)

The number of services since 2013

								79,411	86,428
					49,000	55,297 60,474
18,230 20,131	26,573 29,237 32,892
2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

The number of services